Sunday, June 26, 2011

Why Compare Your Mortgage?

This is an email question from Steve in Leederville. His question asks - I have had my home loan for a couple of years, and have noticed that some banks are offering cheaper interest rates. My question is, should I compare my home loan?

It is important to know what your home loan interest rates are. It is also important to know if you are paying monthly or annual fees, and the features that your current home loan has.

You may be able to save a fair bit of money too, if another or new home loan product has come to the market, and may suit your current needs better.

A call or email to a mortgage broker, may help you get through the maze of comparing your home loan. Mortgage Brokers are paid commissions by banks or lenders, and most mortgage broker do not charge a fee (I Don’t, if your not sure, just ask your broker).

A good mortgage broker, should compare your current home loan, to other products on offer, plus the possible costs associated with either switching your home loan with your current lender, or switching to another bank, versus the savings you may receive.

It really costs nothing to compare your home loan, just a little bit of your time. In the case with Steve, the email question, we were able to switch his home loan to a different mortgage with the bank he was with, saving any possible exit fees. Steve’s interest rate was reduced from 7.4% to 7.1% on his $300,000 home loan. His savings were approx $66 a month, which is quite a significant saving. The bank fee, to switch his loan was $300, so the fee to switch the loan, will be repaid within the first 5 months of starting his new home loan.

If you would like a home loan health check, or to speak to a qualified mortgage broker, please contact me anytime.

Monday, June 13, 2011

How Much Deposit Do I Need To Buy A $425,000 Home

How Much Deposit Do I Need To Buy A $425,000 Home.

Time for my next article, with the how much deposit do I need series, we will look at how much deposit do you need to purchase a $425,000 property in Western Australia, both as a first home buyer, and non first home buyer (buying your second, third home, etc or investment property). We will look at the approx fees and charges too, to give you a guide to how much deposit you need to purchase your next home.

Lets look at how much deposit you need to purchase a $425,000 property in Western Australia, both as a first home buyer, and non first home buyer. We will look at the minimum deposit required, which with most banks or lenders is 5% of the purchase price, plus the associated fees. Of course the more deposit you have the better, and generally speaking your 5% deposit, has to be saved over at least 3 months in a bank account (this is called genuine savings). The deposit can also come the sale of shares, sale of a previous home etc.

Ok, lets look at fees, and the minimum deposit you will need to purchase a $425,000 property in Western Australia (unless you have a guarantor for your home loan, which you may not need a deposit at all) -

First Home Buyers ($425,000 Property).
Property Purchase Price - $425,000
Transfer Stamp Duty - $0
Settlement Agent Fee - $1,550 (Approx)
Balance Of Water Shire Rates - $2,000 (Approx)
Mortgage Registration / Legal Fees - $350 (approx)
Bank Application Fee - $600 ( Some mortgages have no application fee)

Total including Fees - $429,600 (Including The Fees)

Deposit Required $21,250 (5% of $425,000)

You will need $21,250 deposit, as a first home buyer to purchase a property costing $425,000 in Western Australia.

To work out your how much your home loan would be, as a first home buyer purchasing your home for $425,000 in Western Australia –

Purchase price (including fees) - $429,600
Minus Your Deposit - $21,250
Minus The First Home Owners Grant - $7,000

Home Loan Required $401,350

When you borrow more than 80% of the property value, you will pay a once off mortgage insurance fee, which with most banks can be added to the home loan.

Based on purchasing a $425,000 property, with a $401,350 home loan, the mortgage insurance fee would be approximately $12,799 (this fee will vary between the lenders). This fee can generally be added to the home loan. The more deposit you have, the cheaper the mortgage insurance fee will be. Lets add the mortgage insurance fee to the home loan and see what your total home loan will be, and the monthly repayments -

Home Loan $401,350
+
Mortgage Insurance Fee $12,799

Total Home Loan $414,149

Your approx repayments on a $414,149 home loan over 30 years, at an average mortgage interest rate of 7.1% is $2783.21.48 per month,


Buying Your Next Home Or Investment Property ($425,000 Property).
If you have already purchased a home, or you are buying an investment property, you may not qualify for the first home owners grant. You can still purchase a home with as little as 5% deposit, and you will still require 5% genuine savings (this can come from the proceeds of a sale of property, savings in the bank, sale of shares). The biggest difference is you will have to have the funds to also pay for the transfer stamp duty, settlement agent fees, balance of the shire and water rates.

Also too, please note that if you have equity in your current home, and you are buying another property, you may not need a deposit at all, as the equity in your current home, may be able to be used as deposit to fund your new property. You also may not need a deposit either, when buying your next home, if you have a guarantor for your home loan. If using a guarantor for your home loan, you also may be able to borrow the associated fees, so you may require no deposit at all.

Lets look at how much deposit you will need to purchase a $425,000 property, if you are buying your next home or an investment property in Western Australia –

Property Purchase Price - $425,000
Transfer Stamp Duty - $14,203
Settlement Agent Fee - $1,550 (Approx)
Balance Of Water Shire Rates - $2,000 (Approx)
Mortgage Registration / Legal Fees - $350 (approx)
Bank Application Fee - $600 ( Some mortgages have no application fee)

Total including Fees - $443,703 (Including The Fees)

Deposit Required $21,250 (5% of $425,000)
Plus Fees (as above) $18,703

Total Deposit Required $39,953

You will need $39,953 deposit, as a non first home buyer to purchase a property costing $425,000 in Western Australia.

To work out your how much your home loan would be, as a non first home buyer purchasing your home for $425,000 in Western Australia –

Purchase price (including fees) - $443,703
Minus Your Deposit - $39,953

Home Loan Required - $403,750

When you borrow more than 80% of the property value, you will pay a once off mortgage insurance fee, which with most banks can be added to the home loan.

Based on purchasing a $425,000 property, with a $403,750 home loan, the mortgage insurance fee would be approximately $12,875 (this fee will vary between the lenders). This fee can generally be added to the home loan. The more deposit you have, the cheaper the mortgage insurance fee will be. Lets add the mortgage insurance fee to the home loan and see what your total home loan will be, and the monthly repayments -

Home Loan $403,750
+
Mortgage Insurance Fee $12,875

Total Home Loan $416,625

Your approx repayments on a $416,625 home loan over 30 years, at an average mortgage interest rate of 7.1% is $2,799.85 per month.

This is an approximate guide to how much deposit you will need to purchase a property costing $425,000 in Western Australia. If you are unsure, or would like more advice specific to your own personal situation, please contact me anytime. I am a mortgage broker, based in Yokine, with many years of experience. If you have any comments, please leave below, I enjoy reading your feedback.

Tuesday, June 7, 2011

The RBA Keeps Interest Rates On Hold

Some great news today for mortgage holders in Australia, with the decision by The Reserve Bank Of Australia to keep the official cash rate on hold at 4.75%.

It has been an interesting year to date, with many natural disasters possibly causing Australia’s biggest fall in GDP (Gross Domestic Product) in 20 years. Although inflation has increased this year, the RBA expects that this will possibly dissipate as recovery from the natural disasters occurs.

There is still some worry with the sovereign debt crisis in parts of Europe, and credit growth in Australia still remains quite subdued. There has been some softening in some housing markets around Australia; hence the RBA has decided that the current official cash rate of 4.75% is appropriate.

Lets hope they stay on hold for a while.

The Statement by the RBA -
Statement by Glenn Stevens, Governor: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.

The global economy is continuing its expansion, led by very strong growth in the Asian region, though the recent disaster in Japan is having a major impact on Japanese production, and significant effects on production of some manufactured products further afield. Commodity prices have generally softened a little of late, but they remain at very high levels, which is weighing on income and demand in major countries and also pushing up measures of consumer price inflation. In response, a number of the countries with stronger expansions have been moving to tighten their monetary policy settings over recent months. Overall, though, financial conditions for the global economy remain accommodative. Uncertainty over the prospects for resolution of the banking and sovereign debt problems in Europe has increased over the past couple of months, which has been adding to financial market volatility.

Australia's terms of trade are reaching very high levels and national income has been growing strongly. Private investment is picking up, led by very large capital spending programs in the resources sector, in response to high levels of commodity prices. Outside the resources sector, investment intentions have been revised lower recently. In the household sector thus far, there continues to be a degree of caution in spending and borrowing and a higher rate of saving out of current income. The impetus from earlier Australian Government spending programs is now also abating, as had been intended.

The floods and cyclones over the summer have reduced output in some key sectors. As a result there was a sharp fall in real GDP in the March quarter, despite a solid increase in aggregate demand. The resumption of coal production in flooded mines is taking longer than initially expected, but production levels are now increasing again and there will be a mild boost to demand from the broader rebuilding efforts as they get under way. Over the medium term, overall growth is likely to be at trend or higher.

Growth in employment has moderated over recent months and the unemployment rate has been little changed, near 5 per cent. Most leading indicators suggest that this slower pace of employment growth is likely to continue in the near term. Reports of skills shortages remain confined, at this point, to the resources and related sectors. After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn.

Overall credit growth remains quite modest. Signs have continued to emerge of some greater willingness to lend, and business credit has expanded this year after a period of contraction. Growth in credit to households, on the other hand, has softened, as have housing prices. The exchange rate remains, in real effective terms, close to its highest level in several decades. If sustained, this could be expected to exert continued restraint on the traded sector.

CPI inflation has risen over the past year, reflecting the effects of extreme weather and rises in utilities prices, with lower prices for traded goods providing some offset. The weather-affected prices should fall back later in the year, though substantial rises in utilities prices are still occurring. The Bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the next 12 months.

At today's meeting, the Board judged that the current mildly restrictive stance of monetary policy remained appropriate. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation.

If you have any questions or comments, please leave below. If you would like to contact a mortgage broker, for more personal financial information, please contact us anytime.

Thursday, June 2, 2011

How Much Deposit Do I Need To Buy A $400,000 Home.

Time for my next article, with the how much deposit do I need series, we will look at how much deposit do you need to purchase a $400,000 property in Western Australia, both as a first home buyer, and non first home buyer (buying your second, third home, etc or investment property). We will look at the approx fees and charges too, to give you a guide to how much deposit you need to purchase your next home.

Lets look at how much deposit you need to purchase a $400,000 property in Western Australia, both as a first home buyer, and non first home buyer. We will look at the minimum deposit required, which with most banks or lenders is 5% of the purchase price, plus the associated fees. Of course the more deposit you have the better, and generally speaking your 5% deposit, has to be saved over at least 3 months in a bank account (this is called genuine savings). The deposit can also come the sale of shares, sale of a previous home etc.

Ok, lets look at fees, and the minimum deposit you will need to purchase a $400,000 property in Western Australia (unless you have a guarantor for your home loan, which you may not need a deposit at all) -

First Home Buyers ($400,000 Property).
Property Purchase Price - $400,000
Transfer Stamp Duty - $0
Settlement Agent Fee - $1,500 (Approx)
Balance Of Water Shire Rates - $2,000 (Approx)
Mortgage Registration / Legal Fees - $350 (approx)
Bank Application Fee - $600 ( Some mortgages have no application fee)

Total including Fees - $404,450 (Including The Fees)

Deposit Required $20,000 (5% of $400,000)

You will need $20,000 deposit, as a first home buyer to purchase a property costing $400,000 in Western Australia.

To work out your how much your home loan would be, as a first home buyer purchasing your home for $400,000 in Western Australia –

Purchase price (including fees) - $404,450
Minus Your Deposit - $20,000
Minus The First Home Owners Grant - $7,000

Home Loan Required $377,450

When you borrow more than 80% of the property value, you will pay a once off mortgage insurance fee, which with most banks can be added to the home loan.

Based on purchasing a $400,000 property, with a $377,450 home loan, the mortgage insurance fee would be approximately $12,037 (this fee will vary between the lenders). This fee can generally be added to the home loan. The more deposit you have, the cheaper the mortgage insurance fee will be. Lets add the mortgage insurance fee to the home loan and see what your total home loan will be, and the monthly repayments -

Home Loan $377,450
+
Mortgage Insurance Fee $12,037

Total Home Loan $389,487

Your approx repayments on a $389,487 home loan over 30 years, at an average mortgage interest rate of 7.1% is $2617.48 per month,


Buying Your Next Home Or Investment Property ($400,000 Property).
If you have already purchased a home, or you are buying an investment property, you may not qualify for the first home owners grant. You can still purchase a home with as little as 5% deposit, and you will still require 5% genuine savings (this can come from the proceeds of a sale of property, savings in the bank, sale of shares). The biggest difference is you will have to have the funds to also pay for the transfer stamp duty, settlement agent fees, balance of the shire and water rates.

Also too, please note that if you have equity in your current home, and you are buying another property, you may not need a deposit at all, as the equity in your current home, may be able to be used as deposit to fund your new property. You also may not need a deposit either, when buying your next home, if you have a guarantor for your home loan. If using a guarantor for your home loan, you also may be able to borrow the associated fees, so you may require no deposit at all.

Lets look at how much deposit you will need to purchase a $400,000 property, if you are buying your next home or an investment property in Western Australia –

Property Purchase Price - $400,000
Transfer Stamp Duty - $13,015
Settlement Agent Fee - $1,500 (Approx)
Balance Of Water Shire Rates - $2,000 (Approx)
Mortgage Registration / Legal Fees - $350 (approx)
Bank Application Fee - $600 ( Some mortgages have no application fee)

Total including Fees - $417,465 (Including The Fees)

Deposit Required $20,000 (5% of $400,000)
Plus Fees (as above) $17,465

Total Deposit Required $37,465

You will need $37,465 deposit, as a non first home buyer to purchase a property costing $400,000 in Western Australia.

To work out your how much your home loan would be, as a non first home buyer purchasing your home for $400,000 in Western Australia –

Purchase price (including fees) - $417,465
Minus Your Deposit - $37,465

Home Loan Required - $380,000

When you borrow more than 80% of the property value, you will pay a once off mortgage insurance fee, which with most banks can be added to the home loan.

Based on purchasing a $400,000 property, with a $380,000 home loan, the mortgage insurance fee would be approximately $12,118 (this fee will vary between the lenders). This fee can generally be added to the home loan. The more deposit you have, the cheaper the mortgage insurance fee will be. Lets add the mortgage insurance fee to the home loan and see what your total home loan will be, and the monthly repayments -

Home Loan $380,000
+
Mortgage Insurance Fee $12,118

Total Home Loan $392,118

Your approx repayments on a $392,118 home loan over 30 years, at an average mortgage interest rate of 7.1% is $2,635.16 per month.

This is an approximate guide to how much deposit you will need to purchase a property costing $400,000 in Western Australia. If you are unsure, or would like more advice specific to your own personal situation, please contact me anytime. I am a mortgage broker, based in Yokine, with many years of experience. If you have any comments, please leave below, I enjoy reading your feedback.